prices rose by 4.1 percent -- highest since 1990 -- prices of essentials climb far more steeply ... worse if not for China

New inflation data explain middle-class squeeze | By Kevin G. Hall | McClatchy Newspapers | * Posted on Wednesday, January 16, 2008

WASHINGTON — New data from the Labor Department confirm what most middle-class Americans already know: Inflation is squeezing them.

As consumer prices rose by 4.1 percent last year, the highest rate since 1990, the prices of basic essentials such as food, gasoline and health insurance climbed far more steeply, explaining why so many Americans are telling pollsters that the economy is their chief concern.

The Bureau of Labor Statistics reported Wednesday that the price of food and beverages rose 4.8 percent. At the same time, real weekly earnings failed to keep pace, rising 0.9 percent for the year. In the simplest of terms, a dollar earned bought less.
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Digging deeper into the data reveals, for example, that the price of bread rose 7.4 percent last year, almost twice the rate of inflation.

The price of eggs rose 29.2 percent in 2007, while the price of fresh whole milk was up 13.1 percent. Since July, when milk prices first soared, the price of fresh whole milk has risen by almost 23 percent.

"The kinds of things you purchase every day are going up (in price)," ... "People who are at the lower end of the income scale are going to feel that more."
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The inflation news would be worse if not for China. Prices for the types of consumer goods that are coming almost exclusively from China were down last year as in earlier years, serving to hold back broader U.S. consumer inflation.

Apparel prices fell 0.4 percent in 2007, footwear prices fell 0.9 percent and the price of furniture and bedding — China- and Brazil-dominated products that once were the domain of the Carolinas — fell by 0.9 percent.

The price of toys, which now come mostly from China, fell 4.7 percent last year. It's fallen every year since 1997.